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Jenner & Block Partner and former Enron Task Force Director Andrew Weissmann testified this week at a hearing of the Senate Judiciary Committee, which is reviewing the Department of Justice (DOJ) “Thompson Memorandum,” a 2003 DOJ policy that outlines the mandatory factors that federal prosecutors must consider in determining whether to seek to charge corporate entities. It requires prosecutors to consider whether a company has waived the attorney-client privilege and, in most circumstances, whether the company is paying for the legal representation of employees who are not deemed by DOJ to be cooperating with the government.
Mr. Weissmann testified that there is considerable variance in applying the Thompson Memorandum’s directives across the 93 U.S. Attorneys Offices around the country and at Main Justice. Some “[p]rosecutors have interpreted the Thompson Memorandum to mean that it is appropriate at the very outset of a criminal investigation involving a corporation to seek a blanket waiver of all attorney-client communications,” Mr. Weissmann said at the Senate hearing. “In other words, disclosure is sought even though the government could replicate the information.” He said there is a need for further guidance as to when it is appropriate to request a waiver or when the government should consider a corporation's failure to waive “as a sign of non-cooperation.”
Weissmann told the committee that the issues surrounding the Thompson memo are “symptoms of a larger problem with the current state of the law of criminal corporate liability.” He said that most companies view an indictment as potentially “the equivalent of a death sentence,” and that at the very least an indictment can severely impact a company’s financial health and reputation. Moreover, he noted, a corporation can be held criminally liable merely because one employee's criminal actions were deemed within “the scope of her employment,” and were “ motivated at least in part to benefit the corporation” regardless of the corporation's efforts to thwart such activity. He said such an environment offers prosecutors armed with the Thompson Memorandum “enormous leverage” because “corporations will go to great lengths to be deemed ‘cooperative’ with a government investigation” to protect itself.
Mr. Weissmann suggested that a “rethinking of criminal corporate liability is in order.” He said that the standard for criminal liability should take into account a company's attempts to deter the criminal conduct of its employees through an effective compliance program, polices and procedures. “A law-abiding society, the criminal law, and even of the DOJ Thompson Memorandum itself, would then be well served,” by such a standard, he concluded.
Finally, Mr. Weissmann highlighted concerns over the credit given under the Thompson Memorandum to companies that fire or do not pay legal fees for employees who refuse to speak with the government based on the Fifth Amendment. Mr. Weissmann recommended that the Department of Justice revise its polices so as not to encourage an environment “where employees risk losing their jobs or legal defense merely for exercising their constitutional right not to speak to the government.”